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Trading statements

McCarthy & Stone revenue rises

06 September 2017 07:25

McCarthy & Stone said sales increased by 4% to c.£660m (2016: £636m) in the full year ended 31 August 2017, ahead of reporting its annual results on 14 November 2017.

The company reported 52 new sales outlets opened during the year (2016: 64) and total legal completions of 2,3021 (2016: 2,2961).


- Gross average selling price increased by 3% to c.£273k (2016: £264k) in line with previous guidance

- Strong recovery in underlying operating margin in H2 (+ c.700bp). As anticipated, full year margins expected to be lower than prior year due to age mix of stock and higher levels of incentives

- Year end forward order book 21% ahead of the prior year at c.£141m (2016: £116m)

- Workflow on track to support growth strategy and deliver c.80 new sales releases in FY18 (2017: 52)

- Continuing to maintain a strong balance sheet, with c.£30m of net cash (2016: £53m) notwithstanding significant ongoing investment in land and work in progress

- Maintaining industry-leading levels of customer satisfaction as the only housebuilder to receive the full Five Star rating from the HBF for twelve consecutive years

- New strategic relationship with Places for People to access the growing rental market


The group delivered a consistent improvement in trading throughout the year despite the increased uncertainty in the secondary market following the EU Referendum result in June 2016 and the General Election in June 2017.

Total legal completions were in line with the prior year at 2,302 (2016: 2,296) and forward sales have steadily improved throughout the year despite the significantly lower number of new sales releases and first occupations.

All sales lead indicators remain well ahead of the prior year and an increased level of forward sales of c.£141m are being carried into the new financial year, representing a 21% improvement on the prior year (2016: £116m).

Build activity was delivered in line with management expectations, with 49 first occupations achieved in the year (2016: 69).

The group opened 52 new sales outlets during the year (2016: 64) and remains confident of delivering a further c.80 new sales releases in FY18.

As expected, there has been strong upward momentum in average selling prices and margins during the second half of the year, reflecting a continuing improvement in sales mix and quality of sites, and this is set to continue into the next financial year.

Average selling prices have exceeded £273k per unit for the first time in the Group's history (2016: £264k) and this has delivered a record level of revenue of c.£660m (2016: £635.9m).

Margins have recovered significantly since 1 March, with a c.700bp improvement in underlying operating profit margin expected in the second half of the year versus the first half (2017 H1: 10.1%).

As previously guided, full year margins are expected to be lower than the prior year mainly due to the age mix of stock sold and the increased use of part exchange leading to consistently higher levels of incentives.

Over the course of the last financial year, the Group has sought to enhance its business model by developing a strategic relationship with Places for People. This represents an exciting new opportunity to access the growing rental market and has the potential to improve capital turn and enable land investment in new, previously untapped locations.

This strategic relationship resulted in the sale of 126 apartments (included within the total legal completions of 2,302) across 27 sites to be held within a specialist retirement PRS Fund being established and managed by PfP Capital, the fund management business of Places for People.

The apartments will be offered for private open market rent. We will update further on this strategic relationship alongside our full year results announcement in November.

The group continues to lead the housebuilding sector on customer satisfaction. It is the only housebuilder, of any size or type, to have received the full Five Star rating in the Home Builders Federation customer satisfaction survey for twelve consecutive years, in which more than 90% of its customers would recommend it to a friend.

The workflow of the business remains firmly on track to support its growth strategy. Build activity commenced on 73 sites during the year (2016: 54) and the group plans to deliver c.80 new sales releases next financial year (2017: 52), contributing to both FY18 and FY19 sales.

First occupations are planned to increase to c.65 next year (2017: 49) and are expected to be weighted towards the second half of the year due to the timing of our build programmes.

The demand for high-quality retirement housing remains strong and the Group remains confident of delivering its medium-term growth objective of building and selling more than 3,000 units per annum.

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Related Company: MCS

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